Correlation Between CN MODERN and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both CN MODERN and Coffee Holding at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining CN MODERN and Coffee Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and Coffee Holding Co, you can compare the effects of market volatilities on CN MODERN and Coffee Holding and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in CN MODERN with a short position of Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and Coffee Holding.
Diversification Opportunities for CN MODERN and Coffee Holding
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 07M and Coffee is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding and CN MODERN is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on CN MODERN DAIRY are associated (or correlated) with Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of CN MODERN i.e., CN MODERN and Coffee Holding go up and down completely randomly.
Pair Corralation between CN MODERN and Coffee Holding
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 0.98 times more return on investment than Coffee Holding. However, CN MODERN DAIRY is 1.02 times less risky than Coffee Holding. It trades about 0.02 of its potential returns per unit of risk. Coffee Holding Co is currently generating about -0.15 per unit of risk. If you would invest 10.00 in CN MODERN DAIRY on October 16, 2024 and sell it today you would earn a total of 0.00 from holding CN MODERN DAIRY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.12% |
| Values | Daily Returns |
CN MODERN DAIRY vs. Coffee Holding Co
Performance |
| Timeline |
| CN MODERN DAIRY |
| Coffee Holding |
CN MODERN and Coffee Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and Coffee Holding
The main advantage of trading using opposite CN MODERN and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, Coffee Holding can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Coffee Holding will offset losses from the drop in Coffee Holding's long position.| CN MODERN vs. LG Display Co | CN MODERN vs. ePlay Digital | CN MODERN vs. COLUMBIA SPORTSWEAR | CN MODERN vs. Chuangs China Investments |
| Coffee Holding vs. EBRO FOODS | Coffee Holding vs. Astral Foods Limited | Coffee Holding vs. THAI BEVERAGE | Coffee Holding vs. CN MODERN DAIRY |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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